Preparing the Worksheet, Adjusting and Closing entries, and Financial Statements. The ledger accounts of the Christine Sousa Bags for the year ended Dec. 31, 2020 are as follows: Debit Credit Accumulated Depreciation - Off Bldg. 100,000 Accumulated Depreciation - Off Equipt. 150,000 Accounts Receivable 136,000 Accounts Payable 74,000 Cash 72,000 Insurance Expense 25,000 Interest Expense 208,000 Land 400,000 Merchandise Inventory, Jan 1 598,000 Mortgage Payable 1,100,000 Notes Payable due in 2 years 200,000 Office Building 1,600,000 Office Equipment 570,000 Office Supplies 42,000 Prepaid Advertising 75,000 Purchases 2,643,000 Purchases Discounts 172,000 Purchases Returns and Allowances 133,000 Salaries Expense 862,000 Sales 4,600,000 Sales Dicounts 161,000 Sales Returns and Allowances 187,000 Sousa, Capital 1,510,000 Sousa, Withdrawals 200,000 Travel Expense 188,000 Transportation In 72,000 8,039,000 8,039,000 - Additional Information (for adjustments) a. Office supplies consumed during the year amounted to P17,000. b. Advertising expense in the amount of P25,000 has expired during the year. c. Salaries of P21,000 have accrued as at Dec. 31, 2020. d. Depreciation on the office building and on the office equipment amounted to P15,000 and P20,000, respectively. e. The Ded. 31, 2020 ending inventory is P723,000. Required: 1) Prepare the worksheet (posting the adjusting entries) 2) Prepare the Financial Statements a. Income Statement b. Statement of changes in equity c. Balance Sheet 3) Prepare the closing entries 4) Prepare the Post-Closing Trial Balance 5) Make sure to write the proper headings.
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
| Problem #7 | |||||||||||
| Preparing the Worksheet, Adjusting and Closing entries, and Financial Statements. | |||||||||||
| The ledger accounts of the Christine Sousa Bags for the year ended Dec. 31, 2020 are as follows: | |||||||||||
| Debit | Credit | ||||||||||
| 100,000 | |||||||||||
| Accumulated Depreciation - Off Equipt. | 150,000 | ||||||||||
| 136,000 | |||||||||||
| Accounts Payable | 74,000 | ||||||||||
| Cash | 72,000 | ||||||||||
| Insurance Expense | 25,000 | ||||||||||
| Interest Expense | 208,000 | ||||||||||
| Land | 400,000 | ||||||||||
| Merchandise Inventory, Jan 1 | 598,000 | ||||||||||
| Mortgage Payable | 1,100,000 | ||||||||||
| Notes Payable due in 2 years | 200,000 | ||||||||||
| Office Building | 1,600,000 | ||||||||||
| Office Equipment | 570,000 | ||||||||||
| Office Supplies | 42,000 | ||||||||||
| Prepaid Advertising | 75,000 | ||||||||||
| Purchases | 2,643,000 | ||||||||||
| Purchases Discounts | 172,000 | ||||||||||
| Purchases Returns and Allowances | 133,000 | ||||||||||
| Salaries Expense | 862,000 | ||||||||||
| Sales | 4,600,000 | ||||||||||
| Sales Dicounts | 161,000 | ||||||||||
| Sales Returns and Allowances | 187,000 | ||||||||||
| Sousa, Capital | 1,510,000 | ||||||||||
| Sousa, Withdrawals | 200,000 | ||||||||||
| Travel Expense | 188,000 | ||||||||||
| Transportation In | 72,000 | ||||||||||
| 8,039,000 | 8,039,000 | ||||||||||
| - | |||||||||||
| Additional Information (for adjustments) | |||||||||||
| a. | Office supplies consumed during the year amounted to P17,000. | ||||||||||
| b. | Advertising expense in the amount of P25,000 has expired during the year. | ||||||||||
| c. | Salaries of P21,000 have accrued as at Dec. 31, 2020. | ||||||||||
| d. | Depreciation on the office building and on the office equipment amounted to P15,000 and P20,000, respectively. | ||||||||||
| e. | The Ded. 31, 2020 ending inventory is P723,000. | ||||||||||
| Required: | |||||||||||
| 1) | Prepare the worksheet ( |
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| 2) | Prepare the Financial Statements | ||||||||||
| a. Income Statement | |||||||||||
| b. Statement of changes in equity | |||||||||||
| c. Balance Sheet | |||||||||||
| 3) | Prepare the closing entries | ||||||||||
| 4) | Prepare the Post-Closing |
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| 5) | Make sure to write the proper headings. |
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